Nathan Drage best known was his involvement with Thomas Mills in the Teletek Inc scamolla. Here is the story which sums up Teletek. Greed. Unbounded greed," is how Carl describes the scam.
Inside A Wall Street Scandal
Stock Promoter Comes Clean About Market Scam
Bribed Brokers To Push Stock And Pump Up Price
Fraud Is Flourishing In The Bull Market
NEW YORK
CBS
'Carl' admits he bribed brokers to hype his shares.
(CBS) Call him "Carl." He was a stock promoter. His business was bribing brokers to push a stock called Teletek.
?I paid everybody off in cash, took them to strip clubs, and got them to girls, limos? paid for rooms, etcetera," Carl says.
Carl says he was paying off as many as 40 or 50 brokers at a time. Their job was to "convince their clients this was going to be the next AT&T," he says.
In fact, Teletek was a small Las Vegas telecom concern whose then-CEO, Michael Swan, orchestrated the scheme to pump up the company?s stock price.
In the simplest terms, that?s "fraud,? says Bruce Bettigole, who heads the investigation that, so far, has led to more than 40 convictions.
"We are still tabulating the losses of individual investors," Bettigole says.
As more and more Americans have been drawn into the red-hot stock market, schemes like this have flourished, reports CBS News Correspondent Anthony Mason. The Teletek case involved small brokerage firms in ten states and millions of dollars in bribes.
The distribution system was simple: an overnight envelope, a stapler and any old magazine. ?Take it, stuff $5,000 cash in an envelope. Put it inside and staple the magazine shut. Throw it in a FedEx envelope, and mail it to them,? explains Carl about his scheme.
?The person sending the cash would call the recipient and say ?did you get the contract? It was 50 pages long.? Well, the pages were hundred dollar bills. A 50-page contract was $5,000," Bettigole says.
Carl himself made hundreds of thousands of dollars in payoffs that way. And brokers weren?t the only ones on the take.
Carl claims he paid radio talk show hosts to air the story on their programs. ?The east coast guy I paid $20,000 to $25,000. I think it was $20,000, under the table, and $5,000 through check,? he says.
Bettigole says "thousands of people" were defrauded.
At first, Teletek stock soared as an army of brokers pushed it. Everyone was making money.
?Nobody realized the gravy train would stop," Carl says.
It didn?t stop. It crashed.
?Well, the stock is now trading for 4 cents a share," Bettigole says.
Michael Swan, who pled guilty to 72 counts of stock fraud, will be sentenced next month. Carl is now in prison.
?Greed. Unbounded greed," is how Carl describes the scam.
It is the greed that seems to breed in bull markets.
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